Tax Reform Fight Shapes Up Writeoffs In The Forefront

June 4, 1985|United Press International

WASHINGTON — Congress is just back in town and the line of tax reform critics trying to protect various interests is forming, with the head of the Joint Economic Committee fighting for the write-off for state and local taxes.

On the first day lawmakers returned to Capitol Hill from a Memorial Day recess, Rep. David Obey, D-Wis., charged Monday that the elimination of the state and local tax deduction -- a key part of President Reagan`s tax reform plan -- would increase rather than lessen the tax burden differences among the states.

Complaints about other provisions of Reagan`s proposal were expected to be heard today in the House Ways and Means Committee, which was to receive testimony from the chief executive officers of six major corporations.

In his attack, Obey released a study from the accounting firm of Arthur Andersen & Co. that he said showed eliminating the state and local tax deduction could mean residents of some states would have a tax bill as much as 76 percent higher than taxpayers with identical incomes in other states.

Currently, Obey said, the greatest tax burden disparity among the states was 37 percent.

Obey`s home state of Wisconsin, along with other ``high tax`` states such as New York, would be hurt most by the elimination of the deduction.

Obey has repeatedly argued against plans to drop the deduction and the provision promises to be one of the major battlegrounds facing Reagan`s tax reform bill.

The Arthur Andersen & Co. study used several specific economic examples provided to the firm by Obey`s committee.

Obey also released statistics he said showed that states where taxpayers would be hurt most by the elimination of the deduction were the same states that received less federal spending than they paid in taxes.

``This study also makes it clear that the families getting the shaft under the present system, and an even worse shaft if the administration plan is adopted, live in states that are not subsidized by the federal government,`` Obey said.

Meanwhile, Republican and Democratic Senate leaders refused Monday to speculate on when the Senate may take up the tax reform issue.